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Cost Of Solar Power 60% Lower Than Early 2011 In US

The US Solar Energy Industries Association (SEIA) and GTM Research recently released their latest quarterly report regarding the US solar energy market. There are a ton of interesting facts from the report, such as the solar panel costs fact above. Just a few of these cool solar power facts are in the infographic below. Many more are in the charts, graphs, and text that follow the infographic. Enjoy!!

Solar Panel Costs Down

For one, as the title above notes, solar panel costs were 60% lower in the second quarter (Q2) of 2013 than they were in early 2011. Overall solar PV system prices, on average, were 40% lower, and they were 50% lower than average solar PV system prices in early 2010.

US Solar Power Growing Fast

Aside from the massive cost drop, another point worth noting is that solar power continues to grow strongly. Q2 was the second-biggest quarter for solar power growth in US history, only trailing Q4 2012 (primarily due to a drive at the end of the year to install a lot of solar in time to take advantage of 2012 tax credits — the 4th quarter is always the strongest of the year). In total, 832 megawatts (MW) of solar were installed in Q2 2013.

Also worth of note is the clear fact that total solar power capacity in the US is set to surpass 10 gigawatts (10,000 MW) this year. Currently, the country is at 9,370. More likely than not, the 10 GW milestone will be passed sometime this quarter.

As noted in the title, solar panels installed across the US now have enough power capacity to power up to about 1.5 million average US homes. That’s impressive. That’s approximately enough to power Philadelphia or Phoenix, the country’s 5th- and 6th-largest cities.

In 2013 on the whole, about 4.4 GW of solar PV power capacity are projected to come online, about 30% more than in 2012. Yep, that’s a pretty huge chunk of the US total. And the reason? As I wrote above, solar panel costs have dropped a whopping 60% in the past 2.5 years or so.

Solar power is cheap!

Solar Is A Great Investment — Financially, Economically, & Environmentally

Plus, people realize that they are not only making money on these investments, but they’re also helping the climate (which we sort of need to remain livable), helping their local communities, and becoming more energy independent and energy secure.

Speaking of helping the local community, solar power now employs over 120,000 people across the US. That’s enough people to fill the cities of Athens (Georgia), Springfield (Illinois), Ann Arbor (Michigan), or Berkeley (California)… and more. Those 120,000 people are employed in 5,600 companies. Naturally, all of those stimulates local and state economies, as well as the US economy as a whole.

Why Solar Panel Costs Have Fallen So Much

Solar panel costs and total installed solar power installation costs are down across market segments. “Quarter-over-quarter, the national average price declined by 9.3% from $3.36/W to $3.05/W, while dropping 11.1% from $3.43/W one year ago,” SEIA writes. “From Q2 2012 to Q2 2013, residential system prices fell 11.5% percent, from $5.43/W to $4.81/W. Quarter-over-quarter, installed costs declined by 2.2% percent. Installed prices came down in most major residential markets including California, Arizona, and New Jersey…. Non-residential system prices fell 14.7% percent year-over-year, from $4.35/W to $3.71/W, while quarter-over-quarter, installed costs decreased by 5.4%. States with SREC markets, such as New Jersey and Delaware, saw significant price declines since installers must continue to keep margins razor-thin given low SREC prices. Also of note, Pennsylvania’s non-residential system prices dropped by 13% quarter-over-quarter amidst its own fledgling SREC market and a state rebate program set to expire at the end of 2013.”

Solar panel costs are probably partly down due to technological and manufacturing advancements. However, the main driver of the reduction in installed solar panel costs is most likely just economies of scale (as more solar panels are produced, costs come down) and market maturation (as the market grows, competition grows — driving down the price of solar — and installers achieve economies of scale and cut their prices).

Naturally, as solar panel costs continue to drop, solar power grows even faster, which further brings down the cost of solar. (Thankfully, this is quite different from the situation with non-renewable fossil fuels, where greater use of fuel shortens supply and drives costs up over time.)

Here is projected US solar power growth for the coming few years:

I’m sure some of the solar power growth in Q2 2013 was from US homeowners who went solar through the Cost of Solar website. And I’m sure many more will go through our site in the future in order to find the best solar deal they can in their area. Perhaps you will be on of those new solar warriors?

About the Author

Zachary Shahan spends most of his time here on CleanTechnica as the director/chief editor. Otherwise, he's probably enthusiastically fulfilling his duties as the director/editor of Solar Love, EV Obsession, Planetsave, or Bikocity. Zach is recognized globally as a solar energy, electric car, and wind energy expert. If you would like him to speak at a related conference or event, connect with him via social media.
You can connect with Zach on any popular social networking site you like. Links to all of his main social media profiles are on ZacharyShahan.com.

If prices are going to soar down a bit more, I think more people will be investing on this. I mean solar energy is safe and it is a cheaper alternative in the long run. Maintenance is not too expensive so it is still a good option.

The second quarter growth of solar power in the United States the second largest quarter in history, trailing only the fourth quarter of the fourth quarter of 2012 (mainly due to a drive at the end of a lot of installed solar advantage of tax credits in 2012, to take timely – will always be the strongest of the year).

Solar power will continue to grow strongly. The solar powered growth in the second quarter’s second quarter in American history
To learn more please visit: http://www.solarpanelcellonline.com/

sarathpockyar

hahaha.Eventually a million
million solar panels reflecting and absorbing sun light and
particles?. Just like to know whether it will eventually heat up the
near earth atmosphere or cool it down. Either way, we are gonna change
the environment in ways we cannot know and then what are these guys
trying to sustain???.

Mark

I installed a roof full of panels 4 years ago. Payback then calculated out to 6 years.
Due to updates and energy efficiency improvements my New York house is now essentially energy neutral. Not only is the electric bill covered, I now use heat pumps in the winter which has cut fuel oil use to about 175 gallons per year. I also charge 2 plug-in hybrid cars from the house. Consumption runs between 85 and 160 MPG. So now the PV panels are also offsetting monthly gasoline use to a great extent.
I am doing this now in year 2013.
Payback from investment is better than Wall Street can safely provide.
The question is no longer does it work.
The question is why have you not done the same.

Bob_Wallace

Excellent question.

DocScience

Did you count the INTEREST and/or LOST INCOME from the sunk money in your solar panel “investment”?

Safe dividend stocks are providing about 5% plus capital gains.

Bob_Wallace

An investment that pays for itself in 6 years is yielding a 12% return on investment. Last time I checked 12 is larger than 5.

Add in some interest if you like. You’re not going to close that 7 point gap. “Lost income” is replaced by “free electricity”. It’s kind of an easy concept to grasp. Give it a try.

1KW of solar costs $4,000 for installation alone.
It produces $98/year in retail electricity.
The INTEREST alone on $4000 is $140 per year.
A $42 LOSS

We have a ways to go before solar makes economic sense in much, if not MOST of America. Particularly on installation. Get installed residential costs cut in two and we are talking.

Bob_Wallace

You are not allowing for the decades of free electricity once the system is paid off. You are also not calculating in the rising price of grid electricity.

Over 30 years 3% inflation will turn the 12.75c/kWh average grid rate into 19.2c/kWh.

If you live in a 4.2 avg solar hour part of the US (NE) you will generate 45,590 kWh of electricity from a 1 kW system over 30 years. It would cost you $8,830 to purchase that amount of electricity.

If you live in a 5.5 avg solar hour part of the US (SW) you will
generate 60,225 kWh of electricity from a 1 kW system over 30 years. It
would cost you $11,563 to purchase that amount of electricity.

You are not using average installed solar numbers, but numbers that favor your position. The national average is $4.81. After the federal subsidy this is $3.37. A 1 kW system would cost, on average, $3367.

If you finance a $3367 system for 5 years at 6% your total payments will be $3,905. A < $4k investment that returns over $8k and as much as $12k.

That's not bad when one considers that they've got to get their electricity somewhere. It's not like making an optional investment like buying a stock. You're going to be in the game, why not win?

Shiggity

You also didn’t factor in that solar panels help increase the value of your house and reduces selling time. “You have little to no electricity bills” is a good selling point.

DocScience

My neighborhood was originally “solar” with panels on most of the houses. It was indeed a selling point. Now, a couple of decades later, not ONE of the homes still has panels. We will see if this new wave of solar has a similar experience when the time comes to replace the panels or the roof under them.

My home (which unlike my neighbors, did not have panels) is in the mid-Atlantic, where we have rain, ice and snow as well as heat and sun. And cheap, stable electric prices. Not a solar friendly place. What killed solar here? Couple of things. Our trees grew up. Most houses are now shaded in summer. Also, maintaining the roof with solar was incredibly difficult and expensive. Everyone looked at the numbers, their water leaks, the dwindling return and the investment to renew the systems… and called it quits.

Hopefully, these new panels and mounts will age more gracefully and cheaply.

A Real Libertarian

Ah, Bob if you check “DocScience”‘s history you’ll find he believes what he reads in World Net Daily.
Facts, Reason, Sanity. Not going to work here.

Bob_Wallace

I’m familiar with DocMakeitupasyougo.

I look at his sort of comment as a time to lay out the facts for those whom he might otherwise confuse.

DocScience

So what was the error in my calculations?

Surely you can point it out.

A Real Libertarian

OK, you see the comment you’re replying to?

I was replying to Bob Wallace in that comment,

If you look at Bob Wallace’s comment you will see the math in there.

DocScience

I used $4 as the installation cost, this is LOWER than the current national average of $4.81.

I don’t count money taken from others in the calculations of the true return. Imagine how cheap gasoline would be if you could steal 1/3 of it from your neighbors.

Are you counting the 1% drop in PV output per year due to radiation damage? Counting replacement of inverters every 10 years or so? Counting cleaning? Counting damage to roofing from the many penetrations?

Bob_Wallace

Stop the all caps stuff.

Bob_Wallace

If you don’t use real numbers then you don’t end up with a real outcome. Subsidies are a fact of life, at least for a few more years. We’re almost done with them.

If you want to make sure all the numbers are included then make sure to add in all the tax and health insurance dollars you’ll pay out to cover the cost of coal-electricity. That’s money out of your pocket and makes the cost of grid electricity even higher.

Annual output loss is 0.5% or less. If you want to include that, then do.
Inverter warranties are running 20 to 25 years. Inverters do not fail/have to be replaced every ten years.

Cleaning isn’t needed for most arrays. If you mount your panels at less than a 5 degree angle or live in an exceptionally dirty area then you may need to hose them off from time to time.

If your panels are installed correctly then roof penetrations should not be an issue.

DocScience

Am aware only of SMA warranty, 10 years, the extended warranties cost extended $$. And they are the best of the best (IMO).

Getting the NYT to correct a story? Not worth the effort. Look how they defended Broader’s Tesla lies rather than firing him as they should have.

http://johnbrianshannon.com/ John Brian Shannon

Yes, DocScience, it’s all about you, isn’t it?

Externalties. It’s a big word, look it up.

It means that all the fossil fueled power generators that are spewing toxic soot, noxious gases and megatons of CO2 — just so you can have electricity!

And, we are getting sick (literally) breathing your toxic smoke!

Get it?

Cheers, JBS

DocScience

No, it’s about the REALITY of the economics. Not the dancing unicorn version.

Marion Meads

There is a big mathematical disconnect between the 60% lower prices in 2011 than the other parts of data are showing:

“Solar panel costs and total installed solar power installation costs are
down across market segments. “Quarter-over-quarter, the national
average price declined by 9.3% from $3.36/W to $3.05/W, while dropping
11.1% from $3.43/W one year ago,” SEIA writes. “From Q2 2012 to Q2
2013, residential system prices fell 11.5% percent,
from $5.43/W to $4.81/W. Quarter-over-quarter, installed costs declined
by 2.2% percent. Installed prices came down in most major residential
markets including California, Arizona, and New Jersey…. Non-residential system
prices fell 14.7% percent year-over-year, from $4.35/W to $3.71/W,
while quarter-over-quarter, installed costs decreased by 5.4%. States
with SREC markets, such as New Jersey and Delaware, saw significant
price declines since installers must continue to keep margins razor-thin
given low SREC prices. Also of note, Pennsylvania’s non-residential
system prices dropped by 13% quarter-over-quarter amidst its own
fledgling SREC market and a state rebate program set to expire at the
end of 2013.”

It simply drives me crazy how the 60% reduction can come out of this. please help before I lose my sanity!

Matt

It is a little hard to see on the graph, because the util 2012 Q4 number is so big. But it looks like residential when from ~50 MW/quarter in first half of 2010 to ~175MW/quarter in first half of 2013. That is 3.5x growth in 3 years!!! You will also notice the curve is smoother/steadier that the other 2 curves.

Wind Energy

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